Our labour survey data is far from satisfactory

In consonance with the findings of the Reserve Bank of India’s Annual Report of a rise in household debt and drop in financial savings, PLFS presents a picture of employment distress.
In consonance with the findings of the Reserve Bank of India’s Annual Report of a rise in household debt and drop in financial savings, PLFS presents a picture of employment distress.

Summary

  • The latest PLFS found Indian unemployment down and labour force participation up, especially of women, but a closer look reveals an urgency to shore up people’s well-being

At first blush, the findings of the latest iteration of the annual report of the Periodic Labour Force Survey (PLFS) tell a happy story: India’s rate of unemployment for 2022-23, at 3.2%, was about half the 6% level in 2017-18, when these surveys started; also, the labour force participation rate for those aged above 15 was dramatically higher than in either the previous year or in 2017-18, as was the worker population ratio. Even more creditably, the labour force participation rate for women had climbed sharply to 31.6% in 2022-23, 10.5 percentage points higher than in 2017-18.

But then, sooner or later, the first blush must give way to more realistic assessments. There are good reasons to not treat the unemployment rate as a reliable indicator of either distress or well-being in a country with as much regional variation as India. In places where people live on the margins of subsistence, to be unemployed is to die, whereas in more prosperous places with widespread social support mechanisms, people can afford to be picky about the kind of work they take up. In Bihar, unemployment would be very low, whereas in Tamil Nadu and Kerala, the rate of joblessness would be high. Distress, though, would be more acute in areas of low unemployment. The PLFS report also provides data that is more nuanced. In consonance with the findings of the Reserve Bank of India’s Annual Report of a rise in household debt and drop in financial savings, PLFS presents a picture of employment distress. While more people have entered the workforce and are employed, the proportion of regular-wage work has declined by two percentage points, as compared to 2017-18. Those who are self-employed have gone up sharply—by as much as 13 percentage points in the case of women. For the most part, it is people who cannot find a regular employer who are self-employed. Further, earnings have failed to keep pace with inflation for every segment of workers, leaving them worse-off on living standards. India’s consumer price index has risen 29.4% from 2017 to 23, while earnings of the self-employed rose 8.3% over this period, so their inflation-adjusted incomes declined by more than a fifth. The earnings of casual wage workers declined 16% while those on regular wages saw their inflation-adjusted incomes fall by more than a quarter.

While the average unemployment rate has dropped to 3.2%, joblessness is far higher among the educated: 12.1% for diploma holders and postgraduates, and 13.4% for graduates. This shows that the jobs on offer are for the less-skilled rather than better qualified. The government needs to foster broad-based growth. Stepped-up investment in public infrastructure should go with select programmes of R&D, such as in climate science. Make-work schemes such as the rural employment guarantee are targeted doles, not to be confused with actual work. While slower world growth depresses exports, it also brings down commodity prices, facilitating accelerated capital formation in India. India needs new, well-planned towns to absorb the millions migrating from villages for urban jobs in services and industry. Let us build whole new cities to boost demand for assorted materials and skilled and unskilled workers, instead of gloating over superficially low unemployment statistics. The country needs a quantum jump in job generation and there’s no space for complacency.

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